Hudson's Bay Co. is about one-third through its store renovations, a key part of its transformation efforts to draw more customers back to the iconic department store retailer.

And while the Toronto-based merchant, which consists mostly of Hudson's Bay in Canada and Lord & Taylor in the U.S., is making progress, it struggles with some forces beyond its control: last fall's hurricane Sandy in the Northeast States, where Lord & Taylor is mostly based, and this spring's cool, rainy spring in much of North America, which is pinching sales and profits.

"While we still have a great deal of work in front of us, we believe that both Hudson's Bay and Lord & Taylor are moving in the right direction," Richard Baker, chief executive office of HBC, told an analysts conference call on Thursday morning.

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Even so, the retailer generated fewer sales than expected in its first quarter, particularly at Lord & Taylor, Mr. Baker said.

"In our opinion, this sales weakness can be attributed to unseasonably cold weather compared to last year's unseasonably warm weather," he said. "While 2013 has begun on a challenging note, I am confident we will enjoy a successful year.

"As a very significant long-term shareholder of this company, I truly believe we are just beginning to unlock the value embedded in these great businesses."

Other initiatives that he is counting on to bolster business include higher productivity -- which stood at $140 sales per square foot in 2012 at Hudson's Bay, up from $133 the previous year; five more Topshop store-within-stores and the launch of New York-based Kleinfeld Bridal salon at Hudson's Bay's flagship Toronto store; a re-launched e-commerce and digital strategy; a revamping of its high-margin private labels; more emphasis on shoes, apparel and accessories; "significant" renovations of four of each of Hudson's Bay and Lord & Taylor stores; and opening a new Lord & Taylor outlet in Boca Raton, Fla.

In fiscal 2013, HBC expects sales growth of 3 to 5 per cent at stores open a year or more -- an important retail measure. That is on the lower end of the company's goal of annual mid-single-digit same-store sales increases.

In 2012, its same-store sales picked up by 4 per cent overall, rising by 5.4 per cent at Hudson's Bay and 2.9 per cent at Lord & Taylor.

In 2013, HBC expects total sales to rise 1.5 per cent to 3.5 per cent, compared with 5.9-per-cent growth in 2012 from a year earlier. It expects normalized earnings before interest, taxes, depreciation and amortization (EBITDA) of $360-million to $390-million in 2013, compared with $310-million in 2012.

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In its fourth-quarter, HBC profit dropped compared with a year ago as its Lord & Taylor operations in the United States felt the impact of hurricane Sandy. The company, which returned to the public stock markets in November, said net profit from continuing operations were $93.6-million or 81 cents per share for the 14 weeks ended Feb 28.

That was down $5.6-million from the year-earlier quarter, when net income from continuing operations was $99.2-million or 95 cents per share over 13 weeks.

Adjusted earnings that exclude some non-recurring items were $99.3-million or 86 cents per share in the most recent quarter, up from $94.8-million a year earlier.

Despite the U.S. weather problems, HBC's retail sales were up 6.7 per cent year-to-year due to an extra week of selling, higher online sales and strength at its Canadian stores, which enjoyed a 6.1-per-cent increase in same-store sales.

Overall sales grew $86.89-million to $1.386-billion, with the 14th week contributing $50-million of the increase. Online sales accounted for $58-million in the 14-week period ended Feb. 28, up from $35.6-million a year earlier. Lord & Taylor's same-store sales fell 2.9 per cent in U.S. currency.

Marina Strauss covers retailing for The Globe and Mail's Report on Business. She follows a wide range of topics in the sector, from the fallout of foreign retailers invading Canada to how a merchant such as the Swedish Ikea gets its mojo. She has probed the rise and fall (and revival efforts) of Loblaw Cos., Hudson's Bay and others. More

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